Orora has sold OPS, its North American packaging solutions business, in order to focus entirely on its beverage container business of cans and bottles, in what the company says marks a new era.
US-based Veritiv will pay $1.775bn (US$1.2bn) for OPS, with the deal expected to go through later this year, once all regulatory compliances have been undertaken. Orora will receive some $1.69bn after tax, transaction costs and purchase price adjustments.
Orora will use some of the funds to bring forward its $130m of capital investment to further expand its cans capacity in Rocklea, Queensland. Orora says the Rocklea expansion, in combination with recent and ongoing projects, will increase its Cans capacity by more than 30 per cent.
It will also use sale proceeds to pay down debt, and pay a “tax efficient” dividend to shareholders. Investors clearly liked the move, Orora's share price shot up by 7.6 per cent on the news.
The company has been pursuing a sale of OPS for several months, and made clear at its FY24 results presentation that its strategic focus was beverages.
Brian Lowe, managing director and CEO, Orora, said “Today marks a new era for Orora as well as the OPS business as it transitions to Veritiv ownership.
“Veritiv’s interest in acquiring OPS provided us with an opportunity to realise an attractive valuation for shareholders and accelerate our strategy of becoming a specialty value-added beverage packaging player. This leaves Orora with a strong balance sheet, allowing the company to grow our beverage packaging businesses, including further investment in high returning projects such as the expansion of our Rocklea cans facility in Queensland.
“We are extremely proud of the way the OPS business has grown and the value it has delivered whilst being part of the Orora Group.”
In the 2024 financial year OPS business had revenue of US$1.995m, with EBITDA of US$121m. It operated from 66 sites with some 3,500 staff.
Orora says the sale of OPS transforms its business into a focused beverage packaging operation, with leading market positions in most specialised value-added beverage bottle categories, and says the move gives it exposure to higher growth premium spirits and wine categories. It is the ANZ market leader in aluminium cans, with its aggressive cans capacity expansion programme underpinned by long term customer contracts.
Orora’s portfolio has been through significant changes over the past few years, with the sale of its fibre business in 2020, the acquisition of Saverglass last year, and now the sale of OPS. It says its focus on global beverage is a long-held strategy.
Orora says the ongoing premiumisation of its glass business will enable it to capitalise on the trend to drink less but drink better. It holds the number two position in Australasia, and is one of the top three premium glass beverage packaging producers in the world.
Some 73 per cent of Orora's cans are produced for non-alcoholic beverages, and 27 per cent for alcohol. It estimates the total market size around $1.3bn, and says the market is growing at 4-6 per cent per year. Orora has can manufacturing plants in Ballarat, Dandenong, Revesby and Rocklea.
Veritiv Corporation, headquartered in Atlanta, Georgia, is a full-service provider of packaging, jan-san and hygiene products, services and solutions. Additionally, Veritiv provides print and publishing products. It serves customers in a wide range of industries both in North America and globally, and has distribution centres throughout the US and Mexico, and sales teams around the world.
